Keep America At Work

This one has me concerned and I’m not a historian

Somewhere I read that to ignore history is to repeat it

It seems only yesterday that Americans, or those interested in their civil liberties, were shocked that the Bush regime so flagrantly violated the FlSA law against spying on American citizens without a warrant. A federal judge serving on the FISA court even resigned in protest to the illegality of the spying. 

Nothing was done about it.  “National security” placed the president and executive branch above the law of the land. Civil libertarians worried that the US government was freeing its power from the constraints of law, but no one else seemed to care.

The problem with this sort of thing is that once it starts, it doesn’t stop. As Norris reports citing Obama regime security officials, the next stage is to criminalize dissent and criticism of the government.  The May 2010 National Security Strategy states: “We are now moving beyond traditional distinctions between homeland and national security. . . . This includes a determination to prevent terrorist attacks against the American people by fully coordinating the actions that we take abroad with the actions and precautions that we take at home.”[PDF]

Few with power can brook opposition or criticism, especially when it is a simple matter for those with power to sweep away constraints upon their power in the name of “national security.” Deputy National Security Adviser John Brennan recently explained that more steps are being taken, because of the growing number of Americans who have been “captivated by extremist ideology or causes.” Notice that this phrasing goes beyond concern with Muslim terrorists.

In pursuit of hegemony over both the world and its own subjects, the US government is shutting down the First Amendment and turning criticism of the government into an act of “domestic extremism,” a capital crime punishable by execution, just as it was in Hitler’s Germany and Stalin’s Russia. 

Initially German courts resisted Hitler’s illegal acts. Hitler got around the courts by creating a parallel court system, like the Bush regime did with its military tribunals. It won’t be long before a decision of the US Supreme Court will not mean anything. Any decision that goes against the regime will simply be ignored.

Click here to read the article

I want you to think about something.

Many of you will say these things are not even related, but the ones of you that are capable of thinking for yourselves will realize that this is the root of what is going on here.

I recently had a chance to work with a great bunch of people and I really enjoyed what I was doing, but in listening to our customer I began to believe that we were not doing what our customer was trying to tell us so I began to speak out and to make a long story short, a reason was found to let me go.

I understand what they did and why, but I have to ask myself what will happen if we as a society slowly rid ourselves of people that are willing to speak up for what they believe in.

I’ve seen it happen to myself.

I’ve seen it happen to people like Paul Craig Roberts that wrote this article.

I’ve seen it happen to others.

Will we turn into a clique or a clan?

Will we stifle innovation and logic so that we can be part of the “In Group”?

Or will we simply be doomed to repeat history over and over because we were too dumb as a race to learn from the lessons of our past?

Economists who have spent their professional lives rationalizing “globalism” as good for America have no idea of the disaster that they have wrought.

However, the minute one looks out the window upon the world, one realizes that cutting Social Security, Medicare, Medicaid, food stamps, and housing subsidies when 15 million Americans have lost jobs, medical coverage, and homes is a certain path to death by starvation, curable diseases, and exposure, and the loss of the productive labor inputs from 15 million people. Although some proponents of this anti-Keynesian policy deny that it results in social upheaval, Gerald Celente’s observation is closer to the mark: “When people have nothing left to lose, they lose it.”

Neither side in “The Great Stimulus Debate” has a clue that the problem for the U.S. is that a large chunk of U.S. GDP and the jobs, incomes, and careers associated with it, have been moved offshore and given to Chinese, Indians, and others with low wage rates. Profits have soared on Wall Street, while job prospects for the middle class have been eliminated.

The offshoring of American jobs resulted from (1) Wall Street pressures for “higher shareholder returns”, that is, for more profits, and from (2) no-think economists, such as the ones engaged in the debate over fiscal stimulus, who mistakenly associated globalism with free trade instead of with its antithesis—the pursuit of lowest factor cost abroad or absolute advantage, the opposite of comparative advantage, which is the basis for free trade theory. Even Krugman, who has some credentials as a trade theorist, has fallen for the equation of globalism with free trade.

As economists assume, incorrectly according to the latest trade theory by Ralph Gomory and William Baumol, that free trade is always mutually beneficial, economists have failed to examine the devastatingly harmful effects of offshoring. The more intelligent among them who point it out are dismissed as “protectionists.”  

The reason fiscal stimulus cannot rescue the U.S. economy has nothing to do with the difference between Barro and Krugman. It has to do with the fact that a large percentage of high-productivity, high-value-added jobs and the middle class incomes and careers associated with them have been given to foreigners. What used to be U.S. GDP is now Chinese, Indian, and other country GDP.

When the jobs have been shipped overseas, fiscal stimulus does not call workers back to work in order to meet the rising consumer demand. If fiscal stimulus has any effect, it stimulates employment in China and India.

The “let them eat cake school” is equally off the mark. As investment, research, development, etc., have been moved offshore, cutting entitlements simply drives the domestic population deeper in the ground. Americans cannot pay their mortgages, car payments, tuition, utility bills, or for that matter, any bill, based on Chinese and Indian pay scales. Therefore, Americans are priced out of the labor market and become dependencies of the federal budget. “Fiscal  consolidation” means writing off large numbers of humans.

This guy gets it.

Yet the mainstream media, or should I say the corporate sponsored Tokyo Rose Propaganda Group will not even consider letting him attempt to educate Americans on what is happening here in America.

The sad thing is that ultimately their very own jobs and futures will be on the chopping block as this corporate machine begins to eat its own in its unending quest for profit at any cost, no matter what it does to its country that gave it its start.

Click here to read the article

The Stock Market Rally Versus the World’s Economic Fundamentals

What passes for business reporting in the United States is too often a series of breathless reports about the stock market. When the Dow rises precipitously, as it did today (Wednesday), the business press predicts an end to the Great Recession. When the stock market plummets, as it did last week, the Great Recession is said to be worsening.

Pay no attention. The stock market has as much to do with the real economy as the weather has to do with geology. Day by day there’s no relationship at all. Over time, weather and geology interact but the results aren’t evident for many years. The biggest impact of the weather is on peoples’ moods, as are the daily ups and downs of the market.

The real economy is jobs and paychecks, what people buy and what they sell. And the real economy — even viewed from a worldwide perspective — is as precarious as ever, perhaps more so.

Today’s rally was triggered by news that one of China’s official measures of its growth – its Purchasing Managers Index – rose. The index had been in decline for three straight months.

Why should an obscure measurement on the other side of the world cause stock markets in New York, London, and Frankfurt to rally? Because China is so large and its needs seemingly limitless that its growth has been about the only reliable source of global demand.

Many big American companies have been showing profits because they’re doing ever more business in China while cutting payrolls at home. American consumers aren’t buying much of anything because they’ve lost their jobs or are worried about losing them, and are still trying to get out from under a huge debt load (the latest figures show more consumer debt delinquent now that last year and a surge personal bankruptcies). The U.S. housing market is growing worse, auto and retail sales are dropping, and the ranks of the jobless continue to swell.

Europe is in almost as much a mess. The problem there isn’t just or even mainly that Greece and other nations on the “periphery” have too much public debt. A bigger problem is European consumers aren’t buying nearly enough to generate more jobs. Unemployment remains high, and the trend is bad. Manufacturing growth there has slowed to its weakest pace in six months. Yet bizarrely, Europe’s large economies – Britain, Germany, and France – are paring back their public budgets. It’s exactly the wrong time, and a recipe for disaster.

Germany’s so-called “job miracle” (as Chancellor Angela Merkel calls it) is more mirage than miracle. Most of the gains in employment there have come from part-time jobs, often at low pay. Average annual net income per German employee continues to drop. This explains why domestic demand there is so sluggish and why Germany is desperately dependent on its exports of machinery and manufacturing components to Asia, especially China.

Meanwhile, Japan, now the world’s third-largest economy, is a basket case. Japanese consumers aren’t buying much of anything, and why would they? The country is still in the grip of a deflationary cycle that shows no end. Japanese consumers reason if they can buy it cheaper next week there’s no reason to buy now. Basically the only thing keeping Japan’s economy going are its exports of cars and electronic components to China.

Australia is booming, but look closely and you see the same buyer. Australia is making a boatload of money selling its minerals and raw materials to China (Australia is fast becoming one big Chinese mine shaft). The Brazilian economy is soaring. Why? Exports of wheat and cattle to China. Middle East oil producers are getting richer. Why? China’s insatiable thirst for oil.

Elsewhere around the globe the picture is as uncertain. Much of Pakistan is under water. Much of the rest of the Middle East is under tyrannical or corrupt regimes. Russia has suffered such a dry spell it’s hoarding wheat. Despite its wealthy few, India’s masses are still terribly poor.

The stock market could plunge tomorrow or the next day because the world’s economic fundamentals are so precarious.

The global economy cannot be sustained by one big, voracious nation – especially one that’s suffering bouts of civil unrest, actively repressing dissent, suffocating under a blanket of pollution and coping with other environmental hazards, and whose biggest companies are run by the state.

Politicians Passing Wind

The objective of this section, “Politicians Passing Wind” is to highlight campaign promises and other political rhetoric that are part and partial of daily politics. As we all know politicians promise and say just about anything to get elected but for the most part it is nothing more than passing wind. But unlike passing wind there is no foul odor to alert us to clear the room, just plenty of false hope that the electorate have fallen prey too over and over again.  With each promise that we highlight we provide a counter response that hopefully will inspire the electorate to ask harder questions and demand a lot more substance over hot wind.

August 30^th

What they said:

House Minority Leader John Boehner (R-OH) says in a speech on Jobs & the Economy:

Quoting John F. Kenney Boehner says that “an economy constrained by high tax rates will never produce enough revenue to balance the budget, just as it will never create enough jobs”…and therefore he recommends that …“President Obama should work with Republicans to stop ALL of these job-killing tax hikes”

My Response:

Kennedy’s comments were made at a time when the top tax rate on personal income was 91% and the top corporate income rate was 52% and when manufacturing was mostly done in the U.S and companies invested in the U.S. Today the top rate on personal income is 35% (during the Clinton era it was 39.6%) and the top corporate income rate today is 35%. Today very little is manufactured in the U.S and companies are investing abroad. Today taxes are not the job killers but U.S companies outsourcing and investing abroad and not in America for the last 30 years, over the watch of both parties, are the real job killers.

• What does he specifically propose to do about that?

What they said:

Boehner says: America’s employers are afraid to invest in an economy stalled by ‘stimulus’ spending and hamstrung by uncertainty.  The prospect of higher taxes, stricter rules, and more regulations has employers sitting on their hands.  And after the pummeling they’ve taken from Washington over the last 18 months, who can blame them?

My Response:

The problem with America’s employers lack in hiring go back far beyond the past 18 months, it’s more like over 30 years and today has little to do with regulations or taxes. Today in a globalized economy lower taxes and more government stimulus in the U.S. will not stimulate our economy contrary to what politicians passing wind say. These measures only fuel corporate globalism, the affluent, and stimulate the economy where the products are produced. U.S companies are not investing in the U.S because it’s cheaper for them to do so abroad.

• So what does he propose to do about that?  

What they said:

Boehner said: We will not solve our fiscal challenges until we cut spending and have real economic growth – and we won’t have real economic growth if we keep raising taxes on small businesses.

My Response:

Taxes have been steadily reduced for over the past 40 years with minimal results except for huge deficits. During this entire time there have not been any meaningful spending cuts by the government and both parties have been running the show in Washington.  During the GWBush era we saw a surplus disappear and massive deficit spending that has continued into the Obama era. Government cannot create economic growth, nor stimulate economic growth. Companies outsourcing and investing aboard has a negative impact on our economic growth.

• What does he specifically propose to do about that?

What they said:

Boehner said: We also cannot allow politicians in Washington to continue trotting out the same tired scare tactics because they don’t have the courage to say no to whichever union or interest has their hand out. 

My Response:

Agreed, than why is he using the same scare tactics. U.S. companies outsourcing and investing overseas are the real job killers

• What does he, or any elected politicians, propose to do about that

What they said:

Boehner said: We’ve tried 19 months of government-as-community organizer.  It hasn’t worked.  Our fresh start needs to begin now.

My Response:

Bush had 8 years and where did that get us. The last 30 years of government plans have not worked either. We do need a fresh start. But neither the Democrats nor the Republicans represent that fresh start.     

Like with most politicians when passing wind Boehner says many of the right things and most of what he had to say was related to what he called “Obama’s jobs killer plans”…which invokes the same questions as posed above…the real job killer is companies outsourcing and investing abroad because it’s cheaper for them to do so and they realize a better return on investment (ROI).

• What does he specifically propose to do about that?

What they said:

Rep. Harry E. Mitchell, D-Ariz., said in a letter sent Friday (8/27) to House Speaker Nancy Pelosi that he wants to make the Bush era tax cuts on capital gains and estate taxes permanent:

“With today’s news that the nation’s gross domestic product expanded at only a 1.6 percent annual rate for the second quarter, I once again urge you to allow a vote on the extension of key tax cuts that are about to expire,” Mitchell wrote.

My Response:

Problem is the Bush cuts enacted back 2001 and 2003 are still in place but have not created the growth as expected. Why, because today we don’t produce that much in the U.S. Companies are not investing the U.S and haven’t been for a long time by outsourcing manufacturing over the last 30 years. Consequently there are fewer jobs. As already mentioned tax cuts enacted in the U.S will not stimulate our economy or increase our GDP or increase job growth but only serve to benefit the affluent, the foreign producers where the products and jobs are created, and the corporations that outsource.     

• What does he specifically propose to do about that?

What they said:

Obama explained his position for ending the corporate tax breaks to shelter profits offshore by stating:

 “I want to see our companies remain the most competitive in the world,” Obama said. “But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens.”

My Response:

On several occasions Obama has indicated he understands what the real issue is but politicians generally do not level with the American public and as a consequence lead the public to believe there is something the government can really do to resolve this issue. This issue far exceeds more tax breaks now. The real problem is U.S companies realize a better ROI operating abroad versus here in the U.S. Moving tax rates around a percentage or two at the government level has a minimal impact on a company’s bottom line compared to hiring programmers in China for $8k with no benefits annually versus hiring programmers in the U.S at $50k or more plus benefits for example. The reality is the government has limited resources to address this sort of disparity. If Obama or any politician attempts to tax companies in an effort to encourage them to invest in the U.S versus in China or India they are labeled as anti-business. In actuality a tax increase is needed but the rate necessary to offset the disparity would need to be so large that no company would tolerate it nor would it be good for business. If they do nothing they are then labeled as anti-jobs for the U.S worker. There is no simple solution. The government can cut taxes to zero and bankrupt the treasury in the process but this will only serve to benefit companies to invest abroad that much more.         

The bottom line is any politician or business official making claims that tax cuts are needed to stimulate the economy and create jobs (create them where?) is not telling the truth. In a globalized economy that is no longer a valid argument.  As long as U.S companies can realize a better ROI by investing abroad the only thing more tax reductions will do is increase the U.S deficit while increasing company profits and those of their foreign producers.  

• What do our politicians propose to do specifically about that?

Mitch Gurney

Why A Civil Society Extends Unemployment Benefits

I have the questionable distinction of appearing on Larry Kudlow’s CNBC program several times a week, arguing with people whose positions under normal circumstances would get no serious attention, and defending policies I would have thought so clearly and obviously defensible they should need no justification. But we are living through strange times. The economy is so bad that the social fabric is coming undone, and what used to be merely weird economic theories have become debatable public policies.

Tonight it was Harvard Professor Robert Barro, who opined in today’s Wall Street Journal that America’s high rate of long-term unemployment is the consequence rather than the cause of today’s extended unemployment insurance benefits.

In theory, Barro is correct. If people who lose their jobs receive generous unemployment benefits they might stay unemployed longer than if they got nothing. But that’s hardly a reason to jettison unemployment benefits or turn our backs on millions of Americans who through no fault of their own remain jobless in the worst economy since the Great Depression.

Yet moral hazard lurks in every conservative brain. It’s also true that if we got rid of lifeguards and let more swimmers drown, fewer people would venture into the water. And if we got rid of fire departments and more houses burnt to the ground, fewer people would use stoves. A civil society is not based on the principle of tough love.

In point of fact, most states provide unemployment benefits that are only a fraction of the wages and benefits people lost when their jobs disappeared. Indeed, fewer than 40 percent of the unemployed in most states are even eligible for benefits, because states require applicants have been in full-time jobs for at least three to five years. This often rules out a majority of those who are jobless – because they’ve moved from job to job, or have held a number of part-time jobs.

So it’s hard to make the case that many of the unemployed have chosen to remain jobless and collect unemployment benefits rather than work.

Anyone who bothered to step into the real world would see the absurdity of Barro’s position. Right now, there are roughly five applicants for every job opening in America. If the job requires relatively few skills, hundreds of applicants line up for it. The Bureau of Labor Statistics says 15 percent of people without college degrees are jobless today; that’s not counting large numbers too discouraged even to look for work.

Barro argues the rate of unemployment in this Great Jobs Recession is comparable to what it was in the 1981-82 recession, but the rate of long-term unemployed then was nowhere as high as it is now. He concludes this is because unemployment benefits didn’t last nearly as long in 1981 and 82 as it they do now.

He fails to see – or disclose – that the 81-82 recession was far more benign than this one, and over far sooner. It was caused by Paul Volcker and the Fed yanking up interest rates to break the back of inflation – and overshooting. When they pulled interest rates down again, the economy shot back to life.

The Great Jobs Recession is far more severe. It’s continuing far longer. It was caused by the bursting of a giant housing bubble, abetted by the excesses of Wall Street. Home values are still 20 to 30 percent below where they were in 1997. The Fed is powerless because consumers cannot and will not buy enough to bring the economy back to life.

A record number of Americans is unemployed for a record length of time. This is a national tragedy. It is to the nation’s credit that many are receiving unemployment benefits. This is good not only for them and their families but also for the economy as a whole, because it allows them to spend and thereby keep others in jobs. That a noted professor would argue against this is obscene.

They’ve been buying new factories and facilities abroad (China, Brazil, India), and new labor-replacing software at home.

Individuals aren’t borrowing because they’re still under a huge debt load. And as their homes drop in value and their jobs and wages continue to disappear, they’re not in a position to borrow.

Small businesses aren’t borrowing because they have no reason to expand. Retail business is down, construction is down, even manufacturing suppliers are losing ground.

That leaves large corporations.

They’ll be happy to borrow more at even lower rates than now — even though they’re already sitting on mountains of money.

But this big-business borrowing won’t create new jobs.

To the contrary, large corporations have been investing their cash to pare back their payrolls.

They’ve been buying new factories and facilities abroad (China, Brazil, India), and new labor-replacing software at home.

Click here to read the article

Warning: Why Cheaper Money Won’t Mean More Jobs

Can the Fed rescue the economy by making money even cheaper than it already is? A debate is being played out in the Fed about whether it should return to so-called “quantitative easing” – buying more mortgage-backed securities, Treasury bills, and other bonds – in order to lower the cost of capital still further.

The sad reality is cheaper money won’t work. Individuals aren’t borrowing because they’re still under a huge debt load. And as their homes drop in value and their jobs and wages continue to disappear, they’re not in a position to borrow. Small businesses aren’t borrowing because they have no reason to expand. Retail business is down, construction is down, even manufacturing suppliers are losing ground.

That leaves large corporations. They’ll be happy to borrow more at even lower rates than now — even though they’re already sitting on mountains of money.

But this big-business borrowing won’t create new jobs. To the contrary, large corporations have been investing their cash to pare back their payrolls. They’ve been buying new factories and facilities abroad (China, Brazil, India), and new labor-replacing software at home.

If Bernanke and company make it even cheaper to borrow, they’ll be subsidizing a third corporate strategy for creating more profits but fewer jobs — mergers and acquisitions.

The M&A wave has already started. Continental and United Airlines just got approval to merge. Biotech giant Genzyme is on the auction block after Sanofi-Aventis announced a $18.5 billion bid. On Friday, 3Par, a data storage company, accepted a $1.8 billion takeover offer from Dell – one day after Hewlett-packard raised its offer. Campbell Soup is eyeing parts of United Biscuits, BHP Billiton has put in a takeover bid for Potash, Oracle or H-P are likely to pay up to $1.5 billion for security software maker ArcSight. Bain Capital is expected to acaquire Air Medical Group for almost $1 billion. The insurance industry is headed for the biggest merger boom in recent history.

Who wins from all this? If history is a guide, shareholders of acquired companies do better than shareholders of companies doing the acquiring. Top executives who end up running bigger corporations get fatter pay packages. And Wall Street and big-name corporate law firms who engineer the M&As reap a bundle.

Who loses? Large numbers of ordinary workers will lose their jobs. After all, the purpose M&As is to create greater economies of scale and more “synergies.” Translated: More pink slips.

Last week at the Fed’s annual confab in Jackson Hole, Ben Bernanke insisted the Fed will do what’s necessary to increase consumer and business spending in order to keep the economy growing. But cheaper money won’t necessarily create the kind of spending that generates more jobs. In fact, right now it’s having the opposite effect. When consumers and small businesses can’t and won’t borrow more, big businesses use cheap money to bid up the prices of corporate assets and cut payrolls.

What we need now is more jobs, not bigger corporations. And that means focusing on the demand side of the economy, not the supply side.

Modern Corporate Globalism & Old World Colonialism

The Equivalent to the classic Plantation Model

By Mitch Gurney

August 27, 2010

We’ve written extensively here at KAW about corporate globalism and the globalized economy and about those who benefit and those who don’t.  Over the past several days I’ve been following a series of articles published at another site which draws an analogy between today’s corporate globalized economy to that of old world colonialism and plantation models.  

So far the series consist of four articles and are written by Charles Hugh Smith published at his website, OfTwoMinds. Here, as an introduction, I will highlight a section pulled from article #2 of the series and strongly encourage that you take time to read each of these excellent articles, the links are provided below.        

Colonizing the Plantation of the Mind:

All plantation economies rely on exploiting colonies not just for materials and labor, but as controlled markets for the home economy’s products.

Thus Great Britain imposed restrictions on cotton weaving in India, forcing its colonial citizens to buy cloth produced by the home country’s factories.

As I explain in the Survival+ / Survival+ The Primer chapter entitled The Crisis of Neoliberal (Predatory) Global Capitalism, global capitalism has reached the limit of the colonial/plantation model in terms of exploiting new colonies around the globe and subjugating their materials and markets to the purposes of home country domination and profit.

From this point of view, China and India are the last major “colonies” to be exploited, as they provide products and information-technology (IT) services at low cost, keeping modest slices for themselves while enabling the home countries’ corporations to reap premium profits on the quasi-colonial output.

Thus Foxconn, which manufactures Apple devices, pays its workers roughly $200-$300 per month and earns a few percentage points profit–a few dollars at best on each Apple device. Meanwhile, Apple routinely skims gross profits of 40% or more on all its products.

This is the modern model of a plantation/colonial economy; much of the productive assets in China are owned by overseas Chinese (Taiwan) or other overseas corporations (Japan, Korea, U.S., E.U., etc.). This is the classic overseas plantation model in which cheap labor and materials are exploited and waste products are dumped in the colonies.

As the limits of colonialization became increasingly visible, Global Predatory Capitalism had no market left to exploit but its home populace.

It did this in two ways:

1. It purchased the Central State’s partnership in privatizing the profits from rampant speculation and financial leverage–i.e. the “financial innovations” which have strip-mined the middle class of their assets–while spreading the risks and losses from this speculative fraud onto the taxpayers, i.e. the public.
2. It deployed increasingly invasive marketing to colonize the minds of the home country citizenry, effectively brainwashing them into “consumers” who bought into the fantasy of ever-rising real estate and the dubious notion that debt could expand forever as long as the Central State kept credit cheap.

Charles continues:

The Plantation economy has conquered a substantial percentage of the minds of home-country “consumers.” (They were once citizens, but the MSM has brainwashed them into the chattel known as “consumers.”) Now that this internal mono-culture of marketing dominates the populace, exploitation as per the plantation/colonial model can proceed along a slightly modernized pathway.

As in any plantation/colonial economy, the real profits are skimmed by the predatory global corporations and the Central State which enables their domination. Very little flows down to the bottom 95%.

As in any plantation/colonial economy, restive elements will be suppressed, marginalized, undermined or co-opted.

Please read complete article here   

As mentioned so far Charles has written four interlinking articles with Colonizing the Plantation for the Mind the second in the series and runs in the order as listed below:

Wal-Mart and the Plantation Economy (August 24, 2010)

The tyranny of “low prices” is a characteristic of a plantation economy which strip-mines local economies and replaces employment-rich economic ecologies with a single integrated exploitative cartel of global predation.

Wal-Mart is the quintessential plantation in the U.S. and global economies. Like a classic agricultural-commodity plantation, Wal-Mart enters a region and market with a diverse, employment-rich ecology of small businesses and networked supply chains of local and regional manufacturers and distributors, and it bulldozes the entire “forest” of businesses, suppliers and distributors with the irresistible blade of global supply chains and “lower prices, always…”

Colonizing the Plantation of the Mind (August 25, 2010)

The plantation economy’s most valuable colony is the one in our minds…

Shock Troops of Corporate Empire: Hip-Hop, Fast-Food and Social Media (August 26, 2010)

The shock troops of Corporate Empire actively undermine traditional culture, health and engagement with the real world, clearing the way for colonization and passive consumption…

Did The Roman Empire Have Corporations? (August 27, 2010)

Unlike our Corporate/State Empire, the Roman Empire did not have privately held, transnational corporations running the bread and circuses.

My longtime friend G.F.B. recently asked, “Did the Roman Empire have corporations?” Based on my admittedly incomplete reading of Gibbons and a survey of Pompeii I am currently reading, I believe the answer is “no.”

Yes, the Republic and later, the Empire, had ruling Elites and politically influential families who controlled immense wealth, but G.F.B.’s point was not about influence or wealth alone: Did the Empire flourish without accountability and personal responsibility?

In other words, were the Elites which controlled the Empire never held personally accountable? If so, then they may well have functioned as the equivalent of today’s corporations.

But history–and what a long history the Roman Empire carved–suggests individuals who failed paid a price…

 Mitch Gurney

The Two Stories of This Terrible Economy, Yet Obama and the Dems Won’t Tell Theirs

The public doesn’t understand specific policies but it does understand stories that link them together. The stories give the policies context and meaning, and thereby show where policymakers are taking a nation (and, by implication, where the opposition would take it).

Republicans lack specific policies but they have a story. Obama and the Democrats have lots of specific policies but don’t have a story. That spells even more trouble for Democrats.

The Commerce Department reported today (Friday) that the economy grew only 1.6 percent in the second quarter, which is a fancy way of saying what everyone on Main Street already knows. The economy has stalled. Unemployment is still in the stratosphere and shows no sign of improving. The housing market is worsening.

Why? What to do? The Republican story is simple. It’s the fault of government. They say Obama’s policies have bankrupted the nation and made businesses too uncertain to create jobs. The answer is less government. Cut taxes and spending, privatize, and deregulate.

It’s not a new story but it’s capturing the public’s mind because the Democrats offer no story to counter it with.

Obama and the Democrats respond by defending their specific policies. The stimulus worked, they say, as did the bailout of Wall Street, because the economy is better today than it would be without them. If anything, we need more stimulus. And healthcare reform will protect tens of millions.

A large and growing segment of the public believes none of this. The public doesn’t think in terms of specific policies. All it knows is the economy has stalled and there’s only one story that explains why and points the way forward – and that’s the Republican’s.

What should the Democratic story be? How can they connect the dots?

Here’s a clue. In times of economic stress, Americans lose faith in the nation’s large institutions. They blame either government or its counterpart in the private sector – big business and Wall Street.

Twenty years ago, 42 percent of Americans said they trusted government to do what was right just about always or most of the time. Now, only 25 percent do. Twenty years ago 26 percent they had a great deal or quite a lot of confidence in big business; now, only 16 percent do. And almost no one trusts Wall Street. The drop in trust toward all major institutions has been most precipitous since the start of 2008.

The underlying political debate in America is which of these is most responsible for the mess we’re in, and which can be most trusted to get us out of it – big business and Wall Street, or government.

It wouldn’t be hard for Democrats to make the case that big business and Wall Street blew it. The Street’s wild speculation took the economy off the cliff, caused the stock market to crash (and millions of 401(k)s along with it), and created a housing bubble whose burst has hurt millions more.

Big business has used the Great Recession as an opportunity to slash payrolls and cut wages and is now sitting on a $1.8 trillion mountain of cash it refuses to use to create new jobs. Instead, it’s using the cash to build more factories abroad, buy back its own shares of stock, invest in more labor-replacing technologies at home, and do mergers that will lead to even fewer jobs.

Meanwhile, a parade of “public-be-damned” actions have threatened small investors (Goldman Sachs’s double dealing), individuals trying to buy health insurance (WellPoint’s double-digit premium increases), worker safety (the Massey mine disaster), the environment (BP), and even our food (Jack DeCoster’s commercial egg operations).

And a gusher of corporate and Wall Street money has flooded Washington, exemplified by Big Pharma and the health-insurance lobby fighting heatlhcare reform, and Wall Street’s minions fighting off stricter financial reform.

If Obama and the Democrats would connect these dots they’d have a story that would make Americans’ hair stand on end. We’re in this mess because of big business and Wall Street. Government is needed to get us out of it.

It’s not that big business and Wall Street are evil. It’s that they’re out to make as much money as possible – which is what they’re set up to do. That’s why we need an activist government to stimulate the economy, create jobs, and protect the public from their excesses.

So why haven’t Obama and the Dems succeeded yet? Big business and Wall Street have used their money and political clout to stop government from doing as much as needs to be done.

The story is clear, and it has the virtue of being the truth. Why won’t Obama and the Democrats tell it? Is it because big business and Wall Street have the money and political clout even to prevent the story from being told?

Why Boehner’s Blaming Bureaucrats

We’re moving ever closer to a double-dip. Of course, as I’ve said before, most Americans never got out of the first one.

In previous postings I’ve suggested ways to reverse course, including a “people’s tax cut” exempting the first $20K of income from payroll taxes and making up the revenue loss with a payroll tax on incomes over $250,000.

Yet Democrats seem frozen in the headlights of conservative supply-siders, blue-dog deficit hawks, and pollsters who say the public doesn’t trust anything government does.

As to Republicans, now comes John Boehner, capitalizing on this distrust by blaming the bad economy on government bureaucrats.  

In an address billed as a major speech on economic policy, the House GOP leader yesterday (Tuesday) attributed our economic woes to the fact that “taxpayers are subsidizing the fattened salaries and pensions of federal bureaucrats who are out there right now making it harder to create private sector jobs.”

What?

It’s true workers at all levels of government now earn more than their private-sector counterparts. But that’s mainly because private-sector benefits have dropped precipitously over the last few years. Companies have replaced defined-benefit pensions with do-it-yourself 401(k)s, and have ratcheted up premiums, co-payments, and deductibles on employee health-care. Government workers’ benefits haven’t yet been sliced the diced these ways, but the cuts are coming.

The pay gap is also due to the fact that the typical public-sector job requires more education. According to the Center for State and Local Government Excellence, 48 percent of state and local employees have a college degree while only 23 percent of private-sector employees do.

Blaming government workers for this bad economy is absurd, regardless. The Great Recession continues because consumers can’t and won’t spend. They’re overwhelmed with credit-card debt, their mortgages are under water, their nest eggs have become chick peas, and they can’t afford health insurance.

Rather than help alleviate all this, Boehner and his Republican colleagues have been busily voting against extending unemployment insurance, against reorganizing mortgages under bankruptcy, against forcing credit card companies to stop charging exorbitant interest, and against giving Americans affordable health insurance.

As far as I can tell, all Republican want to do is to privatize Social Security, extend the Bush tax cuts to the richest 3 percent of Americans, and deregulate. But none of this seems particularly relevant to the task at hand.

Privatizing Social Security would put retirees entirely at the mercy of the Wall Street casino.

Extending the Bush tax cuts to the richest 3 percent wouldn’t stimulate demand because the very rich save rather than spend most of their extra cash.

And if anything we need more rather than less regulation. Just consider BP’s oil spill, Massey’s mine cave-in, DeCoster’s rotten eggs, Goldman Sach’s predations, and Wellpoint’s double-digit insurance premium increases.  

Boehner delivered his speech at the City Club of Cleveland, a safe distance from those government employees he says are on the make. But of course Boehner is a federal employee. He gets $193,400 a year along with generous retirement benefits. In fact, he has among the fattest salaries and pensions in Washington.

They done it to themselves and to us

I’ve been writing about this for years now and everybody thinks that fool.

He doesn’t have a clue what he is talking about.

Somewhere, some idiot on Wall Street go the idea back in the 70′s that if we would send our jobs offshore that have a high payroll expense, our companies would be more profitable, which would make Wall Street more money.

Slowly, more and more companies followed suit.

And slowly, they all were more and more profitable because they were cutting out their highest fixed expense which was payroll.

I’m sure that somebody back then asked the question of who will buy our products if we put our own customers out of work and I’m sure that same idiot on Wall Street told them there are billions of people in China and India and they will want our products because everybody wants to live like the Americans do.

So everybody joined in.

After all, why pay American wages when you can get it done in China or India for pennies on a dollar and who cares if we get a few products from China that poison our people and who cares if the quality of the products is not up to our standards?

And it continued on for close to 40 years until it reached the turning point on the downward trend of a bell curve in 2008.

Now suddenly we are finding ourselves dependent as a country on other nations for our products.

Now suddenly we are finding out that their people do not buy anywhere near what Americans buy.

Now suddenly we are finding out that our people can no longer afford to buy our products.

And meanwhile our economists are still forgetting to factor in the fact that this time is different because we have put ourselves out of work which is why they can no longer compare what is happening now to what has happened in the past.

And meanwhile our towns are defaulting on their obligations because their tax revenue is going down.

And meanwhile our representatives are ignoring what our very large corporations are doing and absolutely will not put into play common sense reporting requirements that require all publicly traded companies to state on their quarterly and annual financial statements exactly how many people they pay on a permanent and temporary basis and what country they are paying these people in so that we will have the information necessary to make the correct decisions to steer this ship called America.

And finally our retailers are realizing what they have done to themselves

Retail Closing Scorecard

Saks 5: The lux department store company plans to close two Saks Fifth Avenue stores in Plano, Texas, and Mission Viejo, Calif. That’s in addition to stores in San Diego, Portland, Ore., and Charleston, S.C., that Saks closed a month earlier. CEO Steve Sadove said there may be more store closings to come this year.

French Connection 17: The clothing company with the edgy “FCUK” ads closed all but six of its U.S. stores as part of a reorganization. It says it will focus on selling its clothes at department stores. It also closed all 21 of its stores in Japan and sold its Nicole Farhi apparel line.

A&P 25: The Great Atlantic & Pacific Tea Co. (GAP) said it will close 25 grocery stores across five states by the end of the third quarter as part of a turnaround strategy.

American Eagle Outfitters 28: American Eagle Outfitters followed Abercrombie & Fitch into the adult market with its Martin + Osa chain, but just like Abercrombie’s Ruehl, it didn’t work out. American Eagle announced in the spring that the 28 M+O stores and the online business would shut down.

Winn-Dixie Stores 30: Winn-Dixie Stores (WINN) announced in late July that it will close 30 older and under-performing stores by Sept. 22.

Bebe Stores 48: The women’s apparel chain announced in July that it would shutter all 48 PH8 stores after a year of flagging sales.

Men’s Wearhouse 50-60: CEO George Zimmer told analysts that the company now plans to close 50 to 60 Tux stores this year.

Abercrombie & Fitch 110: Abercrombie & Fitch will close nearly 60 under-performing stores in 2010, most of them towards the end of the year. In a recent conference call, CFO Jonathan Ramsden said another 50 stores could close in 2011. The company already closed 11 stores during the first half of the year, mainly at its flagship Abercrombie & Fitch and Abercrombie stores.

Charming Shoppes 100-120: Charming Shoppes (CHRS), the parent of apparel stores Lane Bryant and Fashion Bug, plans to close 100 to 120 stores this fiscal year. After announcing a rough end to 2009, management said it planned to reduce its real estate costs by renegotiating with its landlords. As part of those initiatives, CFO Eric Specter said the company has begun reviewing its lineup of stores, looking for locations that are under-performing and will close those where it can’t get better lease terms.

Blockbuster 500-545: Under assault by video-on-demand and online video rentals, Blockbuster (BLOKA) announced earlier this year that it plans to close 500 to 545 stores in 2010. That’s in addition to the 374 it closed last year.

There are more details in the article.

Retail Sales Numbers

Please keep those store closings when retail sales numbers are reported.

The numbers are typically reported as percentage increases and decreases of “same store sales”. If retailers all close weak stores, reported “same store sales” go up. However, total aggregate sales don’t.

Moreover, one also needs to factor in store closings. From the Toledo article “Several large signature properties – the closed Circuit City store and former Lone Star Steakhouse on Monroe, and the Smokey Bones Barbeque and Grill on Talmadge – have remained closed for more than 18 months.”

Some of those sales vanished into thin air, some of it went to other stores exaggerating “same store sales”.

This is the reason one must analyze sales tax revenue instead of relying on “same store sales” for consumer spending estimates.

Finally, think of the number of people that will be laid off when those stores are closed, and also think what those store closings will do to lease prices.

Click here to read the article

Contributing to: Some Interesting questions from Siggia

By Mitch Gurney

August 25, 2010 

I’d like to contribute to the Some interesting questions from Siggia posting and provide some resources for those interested in learning more about the issues raised in the related postings.

We should perhaps clarify that the article Siggia is responding to Anatomy of Intolerance, posted here the other day is not an opinion written by Virgil, the owner of this blog, but was an opinion written by Robert Reich whose articles appear here on occasion.

It appears by Mr Siggia’s response to Anatomy of Intolerance he is not questioning so much as he is offering his opinion on the various issues Mr Reich discussed in his article and is sharing some value judgments in regards to Mr. Obama. In an effort to clear up what he perceives as confusion and misunderstandings on Mr Reich’s part he passes along some information that is incorrect.

In regards to the Arizona Immigration Law Mr Siggia states:

All it does is duplicate already existing federal law which our current federal government refuses to enforce.  In fact, the Arizona law exhibits more tolerance than does the federal law, as it expressly prohibits racial profiling and says police may ask for proof of citizenship only after probable cause for another crime, such as speeding or fleeing the scene of an accident, has been established.  The federal law makes no such requirement.

Unfortunately Mr Siggia did not provide sources that support the bases of his opinion but the above statement in part is factually incorrect in that there are portions of Arizona’s Immigration Law that differ from federal law and the issues surrounding how police will interpret the law’s anti profiling in practice remain unclear. FactCheck has reported the following:  

We’ll leave it to others to decide whether Arizona’s new immigration law is a good thing or a bad thing — but here we try to straighten out some of the confusing factual claims, first, a quick summary. Contrary to what the law’s defenders often say, the new statute does more than merely mirror federal law. The much-discussed issue of whether the law permits or encourages “racial profiling,” we find:

• The amended law allows police to consider “race, color or national origin” when deciding whether to ask somebody for proof of citizenship, but only to the extent already deemed constitutional by the courts.
• It remains to be seen how police will interpret the law’s anti-profiling language in practice. State officials tell us they have yet to work out what factors police should be trained to use to establish “reasonable suspicion” of illegal status.
• Federal officials are open to criticisms similar to some of those being made about Arizona’s law. A federal manual for training state and local officials says they may consider whether a person has a “thick foreign accent” or looks “out of place” when deciding whether to ask them about their immigration status.
• Arizona’s new statute contains provisions that criminalize, at the state level, certain conduct that’s already a violation of federal immigration law. For instance, immigrants are required under both state and federal laws to carry their alien registration documents or other applicable records at all times – in federal law that’s under 8 USC sec.1304 and 8 USC sec. 1306.
• Other parts of the state law, though, don’t exist at the federal level. They include section 5A, making it illegal for a driver to stop and attempt to hire or to hire and pick up passengers, if that action impedes traffic; for a person to get into someone’s vehicle in order to be hired; or for an illegal alien to apply for work or solicit work publicly in the state. Most of this is aimed at day laborers and those who hire them.
• Another example: Section 2H allows any citizen to sue an official or agency in the state who “adopts or implements a policy that limits or restricts the enforcement of federal immigration laws to less than the full extent permitted by federal law.”
• And section 2B of the new law requires law enforcement officers to try to check the immigration status of anyone they lawfully stop if they have “reasonable suspicion” the person might be an unauthorized immigrant.

Perhaps the single biggest reason this law is so controversial is that immigration – like, say, foreign policy – always has been the purview of the federal government. The feds’ authority is rooted in Article I, section 8 of the U.S. Constitution, which gives Congress the power to “establish a uniform rule of naturalization.” As a practical matter, said Kevin Johnson, an immigration law expert and dean of the University of California at Davis School of Law, it’s unworkable for states to have their own immigration laws, “just like states can’t have their own foreign policies…for that reason, Johnson believes that legal challenges to the law …are likely to succeed under the federal preemption doctrine, which is based on the Constitution’s Article VI, clause 2. Known as the supremacy clause, it says that federal law shall bind “judges in every state” even if state law contradicts it.

Read complete article here

With respect to the Fourteenth Amendment adopted in 1868, some readers might find its history of interest. The practice of granting the right to citizenship by birth in the United States dates back to traditional English common-law the doctrine of jus soli, dating back to the 18^th century and is still very much in practice around the world  today as it is in the U.S. This history is retraced in a CRS report to Congress in 2005, U.S. Citizenship of Persons Born in the United States to Alien Parents:   

The original framers of the U.S. Constitution did not define citizenship of the United States… Although the states and courts in the United States apparently adopted the jus soli doctrine, there still was confusion about whether persons born in the United States to alien parents were U.S. citizens. This arose because citizenship by birth in the United States was not defined in the Constitution nor in the federal statutes.

As a result of the absence of any definition in the Constitution or federal statutes of U.S. citizenship by birth in the United States, citizenship by birth in the United States generally was construed in the context of the English common law.

[The enactment of the Civil Rights Act of 1866 plus the ratification of the Fourteenth Amendment to the Constitution in 1868 were in an effort to resolve these issues]

Regarding the Fourteenth Amendment the report notes:

Although the primary aim was to secure citizenship for African-Americans, the debates on the citizenship provisions of the Civil Rights Act of 1866 and the Fourteenth Amendment indicate that they were intended to extend U.S. citizenship to all persons born in the United States and subject to its jurisdiction regardless of race, ethnicity or alienage of the parents.

The right to citizenship by birth in the United States was not settled until the 1898 case of United States v. Wong Kim Ark  in which the  high court rejected the argument that a child born in the U.S. to Chinese parents wasn’t “subject to the jurisdiction” of the United States because the parents owed allegiance to a foreign emperor.  It said that the words “not subject to the jurisdiction” of the US applied only to children born to parents who were foreign diplomats, or to parents in hostile military occupation of US territory. Their ruling is in reference to the Citizenship Clause section contained in the first sentence of Section 1 in the Fourteenth Amendment which states:

Amendment XIV, Section 1, Clause 1:

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.

Over the past decade or so concerns over illegal immigration has sporadically generated debates over the need to reevaluate these long held legal standings as established in the Fourteenth Amendment and several proposals have been made in Congress but no alterations have yet been made. The CRS report also discusses the various legislative proposals that have been made in recent Congresses intent on altering it and notes:

The courts apparently have never ruled on the specific issues of whether the native-born child of illegal aliens as opposed to the child of lawfully present aliens may be a U.S. citizen or whether the native-born child of nonimmigrant aliens as opposed to legal resident aliens may be a U.S. citizen. However, Wong Kim Ark specifically held that under the Fourteenth Amendment a child born in the United States to parents who, at the time of his birth, were subjects of the Chinese emperor, but had a “permanent domicil [sic] and residence in the United States “and were not diplomats of the emperor, was born a U.S. citizen. The holding does not make a distinction between illegal and legal presence in the United States, but one could argue that the holding is limited to construing the Fourteenth Amendment in the context of parents who are legal permanent residents. However, the Court’s own discussion of the common law doctrine of jus soli and the Fourteenth Amendment as an affirmation of it indicates that the holding, at the least, would not be limited to permanent legal residents as opposed to nonimmigrant, transient, legal aliens and currently accepted law would also weigh against this argument.

Because of the Supreme Court interpretations of U.S. citizenship laws and constitutional provisions, one could argue that a constitutional amendment is necessary to clarify the meaning of “subject to the jurisdiction of the United States. On the other hand, amicus curiae (friend of the court) briefs submitted by several interested organizations to the U.S. Supreme Court for consideration during the case of Hamdi v.  Rumsfeld argued, among other things, that the Supreme Court interpretations never contemplated or intended to include the granting of automatic citizenship by birth in the United States to persons whose parents were aliens who entered or stayed in the United States unlawfully or who were transiently present. Most other jus soli countries have limited citizenship by birth in their territories.

Mitch Gurney

I’m more than willing to add NBC to the Wall Of Shame

received this from a reader a few minutes ago.

more than happy to post it for them too

There is a capability to sign the petition incognito —  “Don’t display my name.”

The petition organizer  (Rudy Torrent of California) now has 218 signatures, plus my signature at #219, and my comment.
Their stated goal is 1,000 signatures.   Signing started on July 23rd, 2010.

The target of this petition are NBC executives and the title on the petition is “Protest NBC’s “Outsourced””.

Petition is found at     http://www.thepetitionsite.com/1/ProtestOutsourced

/////

http://www.nbc.com/outsourced/

/////

Americans have no greater enemies than Wall Street and the corporations and their prostitutes in Congress and the White House.

The economy has not recovered. By the end of this year it will be obvious that the collapsing economy means a larger than $1.4 trillion budget deficit to finance. Will it be $2 trillion? Higher?

Whatever the size, the rest of the world will see that the dollar is being printed in such quantities that it cannot serve as reserve currency. At that point wholesale dumping of dollars will result as foreign central banks try to unload a worthless currency.

The collapse of the dollar will drive up the prices of imports and offshored goods on which Americans are dependent. Wal-Mart shoppers will think they have mistakenly gone into Neiman Marcus.

Domestic prices will also explode as a growing money supply chases the supply of goods and services still made in America by Americans.

The dollar as reserve currency cannot survive the conflagration. When the dollar goes the US cannot finance its trade deficit. Therefore, imports will fall sharply, thus adding to domestic inflation and, as the US is energy import-dependent, there will be transportation disruptions that will disrupt work and grocery store deliveries.

Panic will be the order of the day.

Will farms will be raided? Will those trapped in cities resort to riots and looting?

Is this the likely future that “our” government and “our patriotic” corporations have created for us?

Click here to read the article

Now this gets right to the point

Welcome back to hell said the devil

I started this website several years ago when I realized that it wasn’t just me that was going through what is happening in America.

Unfortunately like all of the other non believers, I had to lose everything and go through seven years of hell before I opened my eyes and realized what was really going on with our corporations sending all of our jobs offshore.

Back in June, I was offered work and I gladly accepted it and actually loved being back at work and solving business problems once again and I was almost to the point today where I thought maybe it was finally over and maybe everything would look up for all of the other people that this has happened too.

There was only one contingency in that I needed a secret clearance and I wasn’t worried about that as Ive worked for the attorney generals office, police depts in vegas and others that all did a background check,

I knew my credit was bad after being out of work all of those years, but so is everybody else that is going through this nightmare, so I thought I would be ok.

Today the Devil called me and he said Welcome back to hell

Your security clearance has been denied, so now I too once again find myself nearly destitute when there is work out there that I can do a better then average job of.

Right this minute my thoughts are, Tonight we will feast on barbeque chicken and wash it down with ice cold beer.

Because tomorrow we will be visited once again by a reality named hell created by our corporations that continue to send jobs offshore even as the American economy crashes down around our ears!

Tax Jujitsu: Why Democrats Should Propose a "People’s Tax Cut"

Republicans are calling the Democrat’s proposal to end the Bush tax cuts on the richest 3 percent a “tax increase,” and demagoging that it will hurt the economy and small business. This is baloney, to put it politely. Let me count the ways:

– Bush’s ten-year tax cut was designed to end this year, so it’s not a tax increase.

– Ending it for the rich simply returns them to the Clinton tax rate, which was hardly confiscatory (reminder: the Clinton years were damn good for business).

– Small businesses would barely be affected. Only 3 percent of small business owners earn over $250,000. And because it’s a “marginal” tax, the Clinton rate would apply only to the portion of their incomes over $250,000.

– Yet extending the Bush tax cut to the richest Americans would give them a $36 billion bonus next year. ($31 billion of this would go to billionaire households.) And that $36 billion would be added to the budget deficit.

– And it wouldn’t even stimulate demand and jobs, because the very rich save (rather than spend) more of their disposable income than the rest of us.

– Finally, ending the Bush tax cut for the top is fair. Income inequality has become so grotesque that the top 3 percent of households rake in almost a third of total income (the highest portion since 1928).

But by the time Democrats explain all this, it’s too late. The Republican furor over a “tax increase” has framed the debate.

Republicans understand the art of tax demagoguery: Put the other side on the defensive by forcing them to explain why a “tax increase” is warranted and they lose regardless.

So instead of playing defense, Democrats should go on the attack.

Accuse Republicans of being shills for the rich.

And don’t stop there. Do tax jujitsu. In addition to ending the Bush tax cut for the rich, put forward another proposal for growing the economy that cuts taxes on lower-income Americans.

Democrats should propose eliminating payroll taxes on the first $20,000 of income, and making up the revenue loss by applying payroll taxes to incomes above $250,000.

This would give the economy an immediate boost by adding to the paychecks of just about every working American. 80 percent of Americans pay more in payroll taxes than they do in income taxes. And because lower-income people would get most of the benefit, it’s likely to be spent.

It would also give employers an extra incentive to hire because they’d save on their share of the payroll tax. And most of the incentive would be directed toward hiring lower-income workers – who have taken the biggest hit on jobs and pay during the recession.

It wouldn’t add to the deficit. Lost revenues would be made up by applying payroll taxes to income exceeding $250,000. This is certainly fair. As it is now, the Social Security payroll tax doesn’t apply to any income over $106,000. Having the tax kick in again at $250,000 would draw on the top 3 percent of earners, who (as noted) now rake in a larger portion of total income than they have in more than 80 years.

Call it the People’s Tax Cut, and let Republicans explain why they’re against it.

Some interesting questions from Siggia.

Hi Virgil,

Your “Anatomy of Intolerance” makes some thoughtful insights, but possible comes to some mistaken conclusions.  I don’t pretend to speak for anyone but myself on this, but perhaps I can shed some light on why some of us believe as we do.

First, do I believe our president is a Muslim?  No, I don’t.  I don’t believe Barack Obama has either the resolve or inner discipline to be a good Muslim.  He drinks alcohol, for one thing, and for another I cannot picture anyone as self-indulgent as Obama observing the Islamic holy month of Ramadan, during which Muslims do not eat, drink, smoke, or have sexual relations from sunup to sundown throughout the entire month.  In fact, I can’t even picture him doing this for so much as a single day.  I have no doubt, however, that he is a Muslim sympathizer who would treat Muslims preferentially over practitioners of other faiths.  No, he is not a Muslim, but neither do I believe him to be a Christian, despite his protests to the contrary.  I believe his true religion is communism, and that his prophets are Karl Marx, Vladimir Lenin, and Saul Alinsky.

The objections to a mosque on the site of Ground Zero are based not so much on intolerance as on sensitivity.  The vast majority of those who voice such objections add that they would not object to a mosque being built elsewhere in New York City.  As it is, New York already has hundreds of mosques.  Why is this one so important?  And why on Ground Zero, which is for the most part a nonresidential business district?  It isn’t just religious freedom that’s an issue here.  Few people would want a Shinto shrine erected on the site of the Arizona Memorial either.

As for the Arizona law, have you read it?  All it does is duplicate already existing federal law which our current federal government refuses to enforce.  In fact, the Arizona law exhibits more tolerance than does the federal law, as it expressly prohibits racial profiling and says police may ask for proof of citizenship only after probable cause for another crime, such as speeding or fleeing the scene of an accident, has been established.  The federal law makes no such requirement.  In your own state of Texas I am sure that if you are stopped even on a routine spot check you are asked for your license and registration.  This is proof of your citizenship.  Why should Hispanics or anyone else be treated any differently?

Finally, the proposed change to the Fourteenth Amendment which would deny citizenship to children born in the United States to illegal aliens.  What’s wrong with that?  What part of the word “illegal” is not being understood here?  As far as I’m concerned, people in this country illegally have one right and one right only:  the right to be deported, as they should be.  Those who would change the Fourteenth Amendment — and do so by constitutional means, I might add — are not necessarily anti-Hispanic.  They have no objections to Mexicans or anyone else entering the United States in compliance with our immigration laws and seeking to become naturalized as American citizens.  Their objection is to what amounts to stolen citizenship, and they merely want to close the loophole that currently makes this possible.

I hope this clears up any misunderstanding.

Warm regards,

Tim

Investors lost millions, if not billions by investing in General Motors

Not only did they lose all of this money, it was orchestrated by our own government because it was necessary so that they could survive and keep Americans working.

Since then, and I do not have the facts in front of me at this very moment, so somebody please correct me, but hasn’t the new Government Motors opened factories offshore?

And again, please correct me if I’m wrong, but hasn’t the new Government Motors recently offered, or is in the process of an IPO where they will sell shares of Government Motors to potential stock holders.

Would somebody please tell me how this is NOT theft on a very large scale that should carry a sentence of life imprisonment for all that orchestrated this fiasco?

I bring all of this up because mish has an interesting article on his site that you can read by clicking here.

Regulators seized ShoreBank Corp. on Friday and agreed to sell assets to a team led by the community lender’s executives and backed by several large U.S. financial firms.

The bank closure, among the 118 failures in the U.S. this year, caps months of uncertainty for a $2.16 billion Chicago bank that had ties to the Obama administration and deep roots on Chicago’s South Side. The new institution will be known as Urban Partnership Bank and led by William Farrow, a former First Chicago Corp. executive who was ShoreBank’s president and chief operating officer at the time of its failure.

The decision to sell to management is a rare move by the Federal Deposit Insurance Corp., which generally bars investors who own more than 10% of the failed bank from bidding on its assets. The FDIC also typically wants to know if bidders have “ever been an officer or director of a failed institution” and “participated in a material way in one or more transactions that caused a substantial loss to any such failed institution,” according to an FDIC document.

The structure of the deal “is unusual,” said Atlanta banking attorney Chip MacDonald.

The holding company will remain intact, according to a person familiar with the deal. Urban Partnership is backed by a consortium of large U.S. financial institutions, including Bank of AmericaCorp., Goldman Sachs Group Inc. and Morgan Stanley.

So let me get this straight.

Not only did we give these too big to fail banks an awful lot of money by bailing them out, we are now giving them special deals because this particular bank has close ties to our administration?

If it walks like a duck and talks like a duck, it must be a duck and we are the ones that got plucked and will continue to get plucked again and again if we let this continue.

Funny

Corporate Rotten Eggs

There are rotten apples in every industry. Or perhaps I should say rotten eggs.

One especially rotten egg is Jack DeCoster, whose commercial egg agribusiness, which goes under the homey title “Wright County Egg,” headquartered in Galt, Iowa, sends eggs all over the country under many different brands. Those eggs have now laid low thousands of Americans with salmonella poisoning, and may well infect thousands more.

DeCoster is recalling 380 million eggs sold since mid-May. Another commercial egg company, also headquartered in Iowa, and in which DeCoster is a major investor, is recalling hundreds millions more.

It’s not clear how recall rotten eggs are recalled. They’re not like Toyotas. They’re already in our food supply. 

But this is only the beginning of the story.  

Thirteen years ago when I was Secretary of Labor, DeCoster agreed to pay a $2 million penalty (the most we could throw at him) for some of the most heinous workplace violations I’d seen. His workers had been forced to live in trailers infested with rats and handle manure and dead chickens with their bare hands. It was an agricultural sweatshop.

Several people in Maine told me the fine wouldn’t stop DeCoster. He’d just consider it a cost of doing business. Evidently they were right. DeCoster’s commercial egg business has a record that would make a repeat offender blush.

In 2003, DeCoster pleaded guilty to knowingly hiring undocumented immigrants (who don’t complain about unsafe working conditions, below-minimum-wage pay, and unsanitary facilities). DeCoster paid a record $2.1 million penalty for that one.

In the 1990s he was charged by Iowa authorities for violating state environmental laws governing the runoff of manure into rivers. He continued to violate environmental laws so often that the Iowa Supreme Court approved an order barring him from building more hog structures.

In 2002 the U.S. Equal Employment Opportunity Commission fined DeCoster’s operation $1.5 million for mistreating female workers. The charges included rape, sexual harassment, and other abuses.

Earlier this year, DeCoster paid another fine to settle state animal cruelty charges against his egg operations in Maine.

In other words, the current national salmonella outbreak is just the latest in a long series of DeCoster corporate crimes. He’s fostered a culture that disregards any law standing in the way of profits. Along the way, DeCoster has abused the environment, animals, his employees, and his customers.

Corporations that play fast and loose with one set of laws are likely to cut corners on others. Look at Massey Energy Company, which owned the mine where 27 miners were killed several months ago. Massey also had a long record of law breaking, and had racked up an even longer list of alleged violations and settlements. Or consider BP, whose malfeasance even before the Gulf spill, included workplace safety violations, deaths, and other environmental disasters.

When I was Secretary of Labor, Bridgestone-Firestone’s refused to install safety equipment resulted in the maiming or deaths of its workers in Oklahoma. A few years later, its faulty tires caused still more deaths.

Some CEOs are just bad citizens, and the corporations they head get the message that the public be damned.

Too often, though, one level or agency of government doesn’t know about corporate malfeasance turned up by another level or agency of government. This is especially true when violations are settled out of court, as is now common. Government doesn’t have nearly enough inspectors or lawyers to bring every rotten egg to trial.

A national database of corporate crimes and settlements would tip off federal, state, and local inspectors to rotten eggs like Jack DeCoster’s agribusiness, Massey Energy, BP, Bridgestone Firestone, and other serial corporate offenders. Scarce inspection resources could be targeted at them rather than at the good eggs. Consumers could benefit as well.

And the rot wouldn’t spill over to other companies now under competitive pressure to treat fines and penalties as the costs of doing business.

Before we can get rid of corporate rotten eggs we need to know about them.

The Anatomy of Intolerance

Connect the dots:

Many Americans (and politicians who the polls) don’t want a mosque at Manhattan’s Ground Zero.

An increasing percent believe the President is a Muslim.

Most Americans approve of Arizona’s new law allowing police to stop anyone who looks Hispanic and demand proof of citizenship.

Most would deny citizenship to children born in the United States to parents who are here illegally.

Where is all this coming from?  

It’s called fear. When people are deeply anxious about holding on to their homes, their jobs, and their savings, they look for someone to blame. And all too often they find it in “the other” – in people who look or act differently, who come from foreign lands, who have what seem to be strange religions, who cross our borders illegally.

Americans who feel economically insecure may even become paranoid, believing, say, that the President of the United States is secretly one of “them.”

Economic fear is the handmaiden of intolerance. It’s used by demagogues who redirect the fear and anger toward people and groups who aren’t really to blame but are easy scapegoats.

It has happened before.

Economic crises animated the pre-Civil War Know-Nothings and Anti-Masonic movements, the Chinese exclusion acts, the Ku Klux Klan in the economically-ravaged South, and the anti-immigrant movements of the early decades of the 20^th century.

In different places around the world, mass economic stress has had far worse results. At its most extreme it has spawned genocide.

We are far from that. But it’s important to understand the roots of America’s growing intolerance. And to fight the hate-mongers and cynical opportunists who are using the fears unleashed by this awful economy to advance their own sordid agendas.

U.S Stimulus Creates Jobs in China Rather than in U.S

By Mitch Gurney

August 20, 2010

On August 19 I posted a revised version that incorporates additional research to an original posting I made on 8/8, Keep the Bush Tax Cuts in Toto – a third perspective . In the updated version I challenged the prevailing ideas about tax cuts as a form of stimulus and for encouraging corporate investments in our domestic economy and noted:

Tax cuts in general are sold to the American people on the premise that we need them to stimulate the economy by spurring consumer spending and help keep America competitive in the global market by encouraging more investment to create more jobs and greater output by our economy. But what happens when the majority of goods are imported as a consequence of outsourcing and companies are no longer investing in our own economy? Who benefits from supply side economics and consumer spending under these conditions?

In a globalized economy these types of tax cuts may help spur economic growth but perhaps not in the marketplace where they are most needed or initially intended.

In order to have a measurable impact on our domestic economy …a majority of the products should be produced in the U.S otherwise increased consumer spending primarily stimulates production in the foreign country where the products were made thus creating the jobs there. Furthermore companies should be investing and expanding in our own economy to complete the circle. Otherwise, assuming the real intention was to grow OUR economy, the cuts will miss the mark.

As things currently stand, the government can cut taxes until the cows come home and the only ones (beside the bankers) to benefit are the foreign producers and the U.S. manufacturers that outsourced.

A popular mantra for keeping the Bush tax cuts is we need them to help keep America competitive in the global market by encouraging more investment to create more jobs and greater output by our economy. Now think about that for a moment in relation to what we have just discussed here. What part of America are they referring to, corporate America? Hell, through outsourcing corporate America has a corner on the global market. Investing where, here or abroad? Create jobs where, here or abroad? Create increased output where, here or abroad? Well, we know the answers to those questions. Who really needs help in competing in the global market are America’s workers. But there’s nothing in these tax cuts that will help with that.

Today I received an article a friend sent me that lends support to the ideas I posed in my article. Until receiving this article I had not seen anyone else write from the perspective I had taken in my Bush Tax Cut posting as to why tax cuts and other forms of stimulus implemented by the U.S are failing. The article is featured here, How American Stimulus Creates Jobs in China rather Than America  providing a link to the complete article here:

Inflation, Not Deflation, Mr. Bernanke:

We are seeing the interplay between the forces of globalization and policy mistakes. Globalization has severely restricted the effectiveness of economic stimulus. Trade plus Foreign Direct Investment (FDI) are half of the global GDP. Trade is visible in terms of stimulus leakage. But, where investment occurs in response to demand growth is far more important. Multinationals can invest anywhere in response to demand. It cuts the linkage between demand stimulus and investment response. The latter is crucial to employment growth, which is necessary for sustaining demand growth beyond stimulus. Essentially, demand is local, but supply is global. This is why the old assumptions on stimulus are no longer reliable.

The above analysis always applies to a small, open economy. A typical macroeconomics textbook will study the extreme cases of a small, open economy and a large, closed economy.  In the former, the leakage is so powerful that stimulus is futile. The latter has no leakage and has maximum stimulus effectiveness. The economies in the real world are in between. A large economy like the U.S.’s is always assumed to resemble a closed economy, while a small trade-oriented economy like Singapore’s is close to a completely open economy.

Multinational-led globalization has made large economies behave like small, open economies. Demand is still local, but supply is global. When the Fed or the ECB tries to stimulate, they are actually stimulating the global economy as a whole. Water, no matter where it comes from, flows downwards. Stimulus, similarly, flows to where costs are low and banking systems are healthy. If you believe this logic, the actions of the Fed and the ECB fuel inflation and asset bubbles in emerging economies rather than stimulate growth at home.

A similar move occurred after the U.S.’s Savings and Loans crisis in the early 1990s. The Fed cut interest rates to 3 percent to help its banking system recover. The lower interest rates pushed Western banks to lend a lot to Southeast Asia, fueling a property bubble there. When the U.S.’s monetary policy was tightened, capital was pulled back. It caused the Asian Financial Crisis of 1997-98.

Today’s story is much bigger and with more dimensions. The emerging economies are twice as big relative to the developed economies with double the trade volume relative to the global economy then. Investment and financial capital can now flow with little friction across the world. I suspect that the Fed policy today would cause distortions in the global economy three times as big as it did in the early 1990s. Its consequences would cause a global calamity far bigger than the Asian Financial Crisis.

The big difference from the 1990s is the employment response to the stimulus in the developed economies. Despite trillions of dollars in stimulus and a sharp one-year rebound in the global economy from the middle of 2009, the developed economies have virtually seen no employment growth. The consequences of the financial crisis have eaten away quite a big chunk of the stimulus. It is, however, not the full explanation. We are seeing overheating in emerging economies. The stimulus is just working somewhere else.

For the stimulus to work in developed economies, it needs to inflate costs in emerging economies so much that the multinationals want to add additional capacity in the developed economies. That is unlikely. The average wage in developed economies is about ten times the average level in emerging economies. And there are five people in emerging economies for each one in developed economies. The math just wouldn’t work out for this approach.

The stimulus policy is more likely to end with inflation. Inflation is a monetary phenomenon. The massive growth in the money supply in the U.S. and other developed economies is not causing inflation for three special reasons. First, the financial crisis has crippled their banking system. Before it is fully repaired, it will slow down money velocity, equivalent to a reduction in money supply in the short term. Second, weak demand is forcing suppliers to refrain from raising prices. Third, as discussed before, multinational companies are investing in emerging economies.

Mitch Gurney

Why The Unfolding Disaster in Pakistan Should Concern You

The human tragedy unfolding in Pakistan right now demands our full attention.

Flooding there has already stranded 20 million people, more than 10 percent of the population. A fifth of the nation is underwater. More than 3.5 million children are in imminent danger of contracting cholera and acute diarrhea; millions more are in danger of starving if they don’t get help soon. More than 1,500 have already been killed by the floods.

This is a human disaster.

It’s also a frightening opening for the Taliban.

Yet so far only a trickle of aid has gotten through. As of today (Thursday), the U.S. has pledged $150 million, along with 12 helicopters to take food and material to the victims. (Other rich nations have offered even less – the U.K., $48.5 million; Japan, $10 million, and France, a measly $1 million. Today (Thursday), Hillary Clinton is speaking at the UN, seeking more.)

This is bizarre and shameful. We’re spending over $100 billion this year on military maneuvers to defeat the Taliban in Pakistan and neighboring Afghanistan. Over 200 helicopters are deployed in that effort. And we’re spending $2 billion in military aid to Pakistan.

More must be done for flood victims, immediately.

Beyond helping to prevent mass disease and starvation we’ll also need to help Pakistan rebuild. Half of the nation’s people depend on agriculture for their livelihood, and a large portion of the nation’s crops and agricultural land have been destroyed. Roads, bridges, railways, and irrigation systems have been wiped out.

Last year, Congress agreed to a $7.5 billion civilian aid package to Pakistan to build roads, bridges, and schools. That should be quadrupled.

While they’re at it, Congress should remove all tariffs on textiles and clothing from Pakistan. Textiles and clothing are half Pakistan’s exports. More than half of all Pakistanis are employed growing cotton, weaving it into cloth, or cutting and sewing it into clothing. In the months and years ahead, Pakistan will have to rely ever more on these exports.

Yet we impose a 17 percent tariff on textiles and clothing from Pakistan. If we removed it, Pakistan’s exports would surge $5 billion annually. That would boost the wages of millions there.

That tariff also artificially raises the price of the clothing and textiles you and I buy. How many American jobs do we protect by this absurdity? Almost none. Instead, we’ve been importing more textiles and clothing from China and other East Asian nations. China subsidizes its exports with an artificially-low currency.

If you’re not moved by the scale of the disaster and its aftermath, consider that our future security is inextricably bound up with the future for Pakistan. Of 175 million Pakistanis, some 100 million are under age 25. In the years ahead they’ll either opt for gainful employment or, in its absence, may choose Islamic extremism.

We are already in a war for their hearts and minds, as well as those of young people throughout the Muslim world.

Right now, Islamic insurgents are using the chaos as an opportunity, attacking police posts in Pakistan’s northwest while police have been occupied in rescue and relief work. Meanwhile, lacking help and losing hope, many Pakistanis are becoming increasingly hostile toward President Asif Ali Zardari.

And, of course, Pakistan has the bomb.

What can you do? Government efforts are important but so is private giving. Check the New York Times’s Lede blog for organizations providing disaster relief. The Oxfam website has lots of good information about who’s doing what, and how effectively.

Mitt Romney’s Wet-Noodle Economics

Mitt Romney is smart enough not to join Newt Gingrich and Sarah Palin in using the proposed mosque at Ground Zero to to lauch a presidential bid. While Gingrich is busy comparing Muslims to Nazis (“Nazis don’t have the right to put up a sign next to the holocaust museum in Washington”), and Palin is calling on New Yorkers to “refudiate” the plan (she subsequently corrected her word choice), Romney is offering an economic plan.

That’s a wise choice. Mitt knows Americans don’t care about mosques in Manhattan. They care about money in their own mitts.

Romney is intent on selling himself to America as the businessman who can turn the country around (sad to say, unemployment is likely to remain high all the way through November, 2012). Unlike Palin and Gingrich, Romney did, after all, run a business (yes, it was a firm that bought and sold companies and laid off lots of people along the way but, hey, that’s business).

So we should take Romney’s economics seriously. In today’s (Wednesday’s)  Boston Globe op-ed Romney attacks Obama’s economic policies for being ineffective and calls for what he calls a “growth and jobs” agenda. Here are the main points:

– match U.S. corporate taxes with those of other developed economies,

– preserve the Bush tax cuts for everyone, “especially small business,”

– allow businesses to write off capital investments made in 2010 and 2011 rather than over time,

– eliminate taxes on investment dividends,

– eliminate taxes on capital gains and interest for households earning less than $250,000 a year, and

– balance the federal budget.

Apart from the impossibility of simultaneously cutting taxes and balancing the budget without taking a meat cleaver to Social Security, Medicare, and defense spending (Romney delicately sidesteps this conundrum by urging we “reshape government programs” and “restructure entitlements”), his policies raise a more fundamental problem.

Call it the wet-noodle problem.

For Romney, the key to America’s recovery is to cut taxes on businesses and on people who invest in them. These steps, he says, are the “conditions that enable businesses of all sizes to grow and thrive.” In other words, if businesse get more capital at less cost, they’ll create jobs.

But anyone looking closely at the American economy today would see this is nonsense. American corporations have an unprecedented $1.8 trillion of cash. The Fed, meanwhile, has slashed interest rates to essentially zero – a record low – and is still holding over $2 trillion in securities that it said last week it will keep from shrinking. And a Federal Reserve survey released earlier this week showed that banks have been making it easier for businesses of all sizes to get loans. Credit standards for small firms have been loosened for the first time since late 2006.

In other words, businesses have all the capital they need. They’re sitting on it or can borrow it more cheaply than ever. But they aren’t using it to create jobs.

Why not? Because there’s not enough demand for their products or services. Consumers aren’t buying.

Retail sales continue to slide. Wal-Mart, Home Depot, and Target report disappointing sales. Same with popular back-to-school retailers like Aeropostale, American Eagle Outfitters, and TJX. Housing sales are down. Appliances are down. (Cars sales are up a bit but that’s mainly because they fell to record lows in 2008 and 2009, and by now some people who have held back need another.)

Romney’s supply-side economics won’t create jobs. It’s pushing on a wet noodle. Businesses create jobs only if consumers are pulling the noodle from the other end.

These days, businesses are raising profits by cutting costs (mostly by laying off even more workers), shifting operations abroad wherever they can find consumers (China, Brazil, India), and buying up their own shares of stock. Romney’s tax breaks will only hasten all this.

If Mitt Romney really wanted to increase American jobs and not just corporate profits he’d understand why consumers aren’t buying, and focus his proposals there.

The first reason they’re not buying is they’re still carrying a huge debt load. Mortgage debt is still engulfing millions of families. Americans also owe some $826.5 billion in revolving credit, mostly on credit cards (credit card debt was $975.7 billion in September 2008, so they still have a long way to go). On top of that, outstanding student loans (both federal and private) total some $829.7 billion.

So instead of boosting corporate profits, let Americans reorganize their mortgage debt in personal bankruptcy, protect them from credit card companies that charge gargantuan interest on credit card debt, and give their kids more direct aid for college.

The second reason consumers aren’t buying is their nest eggs have shrunk down to the size of peas. Homes are still worth 20 to 40 percent less than in 2007, and 401(k)s are down 20 percent. Baby boomers now have to save for retirement big time.

So instead of a giving corporations a tax break on their incomes, and giving investors tax breaks on dividends and capital-gains, cut the payroll tax for ordinary Americans. 80 percent of Americans pay more in payroll taxes than in income taxes, and it’s a regressive tax. Eliminate payroll taxes on the first $20K of income and make up the difference by raising the cap on income subject to payroll taxes (now about $106,000).

The third reason consumers aren’t buying is they’ve lost their jobs or are scared of losing them, or can only find part-time jobs that pay less. And because most families rely on two wage earners, the chance that at least one of them has lost or is in danger of losing a paycheck is double. That means families have no choice but to economize.

So instead of giving tax breaks to companies for buying more machines to replace their workers, make big profitable companies pay severance to any worker they lay off, equal to a month’s salary times the number of years worked. And require that any corporations receiving government contracts and subsidies (including defense contractors) use the money to create jobs in the United States.

Mitt Romney is the most credible of all the likely Republican presidential candidates. He’s right to focus on the economy, and he’s to be commended for coming up with specifics. But his specifics are loony. Romney’s wet-noodle economics won’t create American jobs.